Vince Lombardi, U.S. football player, coach, and 1971 NFL Hall of Fame inductee.

The stock market opened the month higher on news from the G20 summit meeting that suggested trade tensions between the U.S. and China might be easing. But the enthusiasm was short-lived amid conflicting signals over the discussion between President Trump and Chinese President Xi.

No Santa

As the month progressed, worries about the ongoing trade dispute and a global economic slowdown added to negative investor sentiment. With the month half over and hopes for a “Santa Claus Rally” fading, the stock market ignored positive developments, such as China’s steps to reduce trade tensions by announcing soybean purchases and lowering auto tariffs.

Fed Disappoints

Stocks dropped further following the mid-December Federal Open Market Committee meeting in which policymakers raised short-term rates 0.25 percent. The markets struggled to manage expectations when Fed Chair Jerome Powell indicated the Fed was staying its course with two more potential hikes in short-term interest rates for 2019.

Breathtaking Volatility

Holiday market action led to a breathtaking rollercoaster ride as the Dow lost over 600 points on Christmas Eve, then soared 1,000 points the day after and the S&P 500 ended the year lower. This was the first drop since 2008 for the S&P 500.2

Yahoo Finance, December 31, 2018. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in January

The curtain will soon rise on the fourth-quarter earnings season, and the results are expected to impact investors’ outlook for 2019.

Wall Street estimates for 2019 are at a record high for S&P 500 companies.4 Despite this, some analysts have trimmed growth estimates for S&P 500 companies to 8.2 percent, down from 10.2 percent two months ago.5 Some analysts are forecasting more modest growth in the 3-4 percent range.6 Leading concerns are interest rates, the trade outlook, and global economic growth.

It’s uncertain if these recent trade deals will help negotiations with China. Some believe that the elimination of multiple parallel trade negotiations will benefit U.S. interests as the economic impact of tariffs begin to weigh on China’s economy.

World Markets

Overseas equities suffered smaller declines than those experienced by U.S. stocks, with the MSCI-EAFE Index sliding 5.4 percent.7

Trade tensions, political uncertainty, and economic weakness drove broad declines in France, Germany, and the U.K.8.

Pacific Rim markets were generally more resilient, with smaller losses in Australia and Hong Kong. Japan was among the weakest of the major international markets, losing 10.5 percent in December.9

World Market Recap for December 2018

Emerging Markets

December

Year-to-Date

Hang Seng (China)

-2.5%

-13.6%

Kospi (Korea)

-2.7%

-17.3%

Nikkei (Japan)

-10.5%

-12.1%

Sensex (India)

-0.3%

5.9%

Jakarta Composite (Indonesia)

2.3%

-2.5%

Bovespa (Brazil)

-1.8%

15.0%

IPC All-Share (Mexico)

-0.2%

-15.6%

Merval (Argentina)

-3.8%

1.1%

ASX 200 (Australia)

-0.4%

-6.9%

Europe

DAX (Germany)

-6.2%

-20.0%

CAC 40 (France)

-5.5%

-11.0%

Dow Jones Russia Index (Russia)

-5.1%

-7.4%

FTSE 100 (Great Britain)

-3.7%

-12.6%

Yahoo Finance, December 31, 2018. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product

Employment

The labor market remained strong, adding 155,000 nonfarm jobs in November and keeping the unemployment rate unchanged at 3.7 percent. Year-over-year wage growth came in at 3.1 percent, a growth rate that matched last month’s 12-month increase.11

Retail Sales

Retail sales rose 0.2 percent from the prior month and 4.2 percent higher from November of last year.12

Industrial Production

Aided by a jump in utility usage due to a frigid month, industrial production picked up 0.6 percent. Output at U.S. factories was flat.13

Housing

Housing starts increased 3.2 percent in November. Year-to-date, housing starts are up by 5.1 percent vs. the first 11 months of last year.14

Purchases of new homes fell 5.5 percent in September. Sales through the first nine months are modestly higher, up 3.5 percent, compared to the same period in 2017.15

Consumer Price Index

The price of consumer goods was flat from the previous month, due primarily to a broad decline in oil prices. Core inflation — not including the more volatile food and energy categories — rose 0.2 percent.16

Durable Goods Orders

Orders for long-lasting goods rose 0.8 percent, but a jump in aircraft orders offset weaknesses in other manufacturing sectors.17

The Fed

At the conclusion of its two-day meeting on December 19, the Fed unanimously elected to raise the federal funds rate by 0.25 percent.

This signaled that Fed Chair Powell was staying his proposed course, bringing caution to investors and stocks to drop as news broke of two more potential short-term interest rate hikes in 2019.

Finally, the Fed’s economic outlook was revised with expectations of some slowdown in economic growth and less inflation.18

By the Numbers

Raising children

$451,94418

Cost to raise a child from birth to age 18 in the United States

$25,10818

Cost per year

$6,93418

Annual cost for housing

$2,80718

Annual cost for food

$3,28918

Annual cost for transportation

$1,41018

Annual cost for clothing

$2,00718

Annual cost for healthcare

$6,56618

Annual cost for childcare and education

84%29

Percent of parents who say college is an investment for the future

67%20

Share of high school graduates who go on to college

$35,256/year21

Average salary for individuals with only a high school diploma

$59,12421

Average salary with a bachelor’s degree

$69,73221

Average salary wiith a master’s degree

$84,39621

Average salary wiith a doctorate degree

1022

Number of hours each week mothers spent caring for children 50 years ago

1422

Number of hours they spend today

2.522

Number of hours each week fathers spent caring for children 50 years ago

822

Number of hours they spend today

85%23

Percent of child sports coaches who are fathers coaching their own kids

37%24

Percent of kids ages 6-12 who play a team sport regularly

36%25

Share of those families who spend more than $500 a month per child on athletics

19%25

Share who spend more than $1,000 a month

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance.

The forecasts or forward-looking statements are based on assumptions, may not materialize and are subject to revision without notice.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial advisor for additional information.

Copyright 2019 FMG Suite.

1. The Wall Street Journal, December 31, 2018

2. New York University, Stern School of Business, December 31, 2018

3. FactSet Research Systems, Inc., December 31, 2018

4. FactSet Research Systems, Inc., December 7, 2018

5. Reuters, December 10, 2018

6. Reuters, December 10, 2018

7. MSCI.com, November 30, 2018

8. MSCI.com, November 30, 2018

9. MSCI.com, November 30, 2018

10. The Wall Street Journal December 7, 2018

11. The Wall Street Journal, December 14, 2018

12. The Wall Street Journal, December 14, 2018

13. The Wall Street Journal, December 18, 2018

14. The Wall Street Journal, December 19, 2018

15. The Wall Street Journal, December 12, 2018

16. The Wall Street Journal, December 21, 2018

17. The Wall Street Journal, December 19, 2018

18. U.S. Department of Agriculture, December 2018

19. Statista.com, 2017

20. Bureau of Labor Statistics, April 26, 2018

21. SmartAsset.com, May 15, 2018. Figure for lifetime earnings assumes average income over the course of 42 working years.

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The content is developed from sources believed to be providing accurate information.
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals
for specific information regarding your individual situation. Some of this material was developed and produced by
FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named
representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and
material provided are for general information, and should not be considered a solicitation for the purchase or
sale of any security.

Copyright 2019 FMG Suite.

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